Posted by Marc Hodak on October 8, 2007 under History | 
Yesterday’s WSJ has a story about Ohio Attorney General Marc Dann. Dann is nurturing a reputation as a “bad cop” in enforcement against certain business practices. He says:
My job is to be the bad cop, and I’m comfortable with that role because I believe a terrible crime has been committed.
The “crime” he’s referring to is the chance that banks took on turning low-income folks into homeowners, what Dann calls “the largest financial scam in American history.”
Sure, that didn’t work out perfectly, but Santayana’s famous quote works well, here. About 130 years ago, Ohio attorneys general began a crusade against Rockefeller and Standard Oil. Ohioans of the day viewed Standard’s products as superior in quality as well as lower in price. They saw Rockefeller as a local Clevelander who did well, a rags-to-riches story to inspire youths everywhere, and a boon to their state’s move to compete with Pennsylvania and New York as a major industrial and financial center. Ohio’s political and media elite had other ideas.
Euclid Avenue, 1912
Ohio’s politicians began what can only be called an obsessive campaign against Standard Oil. Ohio tax authorities began the relentless pursuit of Standard, and Rockefeller personally, for highly questionable tax liabilities. In 1890, Ohio’s attorney general, successfully went after Standard’s charter, forcing the trust to temporarily dissociate. These attacks propelled the careers of these prosecutors, and sold a lot of newspapers based on the narrative of the “tough” public servant pursuing a big business “unaccountable to the people.”
Rockefeller eventually, and with a heavy heart, moved his family and his headquarters east to escape the persecution. Standard’s mammoth financial and business activities followed him to New York. The oil refining industry shifted to what would become the “Chemical Coast” of New Jersey. Despite the fact that Cleveland is where the mighty New York Central, Erie, and Pennsylvania railroads converged on a fine harbor, Cleveland lost its industrial anchor, and the transportation hub of the U.S. would migrate west to Chicago.
Euclid Avenue, 2006
Today, when a New Yorker or Philadelphian wanders the streets of Cleveland, it seems like a city that has been largely bypassed by the 20th century. While other cities went through ups and downs with the economy, from the late 1800s Cleveland only went down. Unlike Philadelphia, Chicago or Pittsburgh, Cleveland never bounced back from the depression. Most businesses along what was once a thriving Euclid Avenue remain shuttered to this day. No major business calls Cleveland its home.
The destruction of Cleveland’s hopes of becoming a major city on par with Philadelphia, Pittsburgh, or Chicago was not an economically driven loss. It was a politically driven forfeit.
So, Ohio’s current attorney general comes from a distinguished line of “tough” guys going after “criminal” business interests.
At least the Indians are still in the pennant race.
Posted by Marc Hodak on October 7, 2007 under Practical definitions |
I’ve been seeing these ads on TV with a child saying, “I’m too young to vote, but if I could…” they say they would vote for the candidate who will “fix” health care, and protect Social Security and pensions. This ad is sponsored by the AARP.
This is my new definition of chutzpah.
For those of you who haven’t studied the numbers, AARP is the organization most committed to the greatest inter-generational wealth transfer in world history. They have saddled today’s kids, those cute ragamuffins who can’t yet vote, with $39 trillion in liabilities in excess of assets for Social Security and Medicare. Now, the AARP wants to continue that campaign in the name of the kids.
(Below the fold is a math challenge)
Read more of this article »
Posted by Marc Hodak on October 4, 2007 under Economics |
A Wharton professor, Joel Waldfogel, has just published a book called “Tyranny of the Market,” a play on Mill’s notion of the tyranny of the majority. Waldfogel’s thesis is this:
– Everyone think markets provide what everyone wants in the right amounts
– Everyone thinks that governments are grossly inefficient at providing what people want
– Markets, in fact, sometime leave minorities behind because their preferences cannot be profitably met for high fixed-cost products or services
– It may be efficient to not always let the market decide what or how much to produce
I think Waldfogel is making a thoughtful argument, here, but I don’t like it on several grounds:
– Far from everyone, including most economists, thinks that markets are all that great, let alone perfect
– Far from everyone, especially those dealing with voters, considers government to be grossly inefficient
– The idea that high fixed-cost products don’t permeate as easily into minority populations makes sense in theory, but is vastly overstated
– Many economics professors, including those with a high profile, continuously and exhaustively make the claim that market inefficiency provides some rationale for government intervention
Although a lot of good stuff has been written about that last point, none of those writings, including Waldfogel’s, provides a decent explanation, or even convincing examples in the real world, of how government imperfections can be sufficiently overcome to make their remedy of market imperfections an efficient solution.
In fact, history speaks with one voice when it comes to comparing government remedies for market imperfections versus market evolution around those imperfections. Government interventions, even if they seem to work for a little while, almost invariably become a story of waste, fraud, or astronomical costs–and often all three. Most things that people historically said the market couldn’t do have been done, including private mail, private toll roads, an explosion of products and services accessible to minorities of all types, even the poor (still not “perfect,” but a generation ago non-existent, like cell phones and mortgages).
In fact, government intervention is a powerful reason that minorities and the poor don’t have more choices. Nearly every business is subject to regulatory costs that are a huge source of the overall fixed costs that Waldfogel properly laments. How much of our uninsured are that way because well-intentioned minimal coverage regulations make health insurance unaffordable for so many people?
Posted by Marc Hodak on October 2, 2007 under Collectivist instinct |
“We tell the government, ‘Take what you want, just give me and my family the essentials of life — food, shelter and an education,'”
– Egyptian union activist in a recent article about unrest in that country.
Contrast this with:
“Any society that would give up a little liberty to gain a little security will deserve neither and lose both.”
– Benjamin Franklin
Posted by Marc Hodak on under Practical definitions |
Illegal labor. What an ugly term.
Definition: I want to work for you. You want me to work for you. Someone else gets to say: “Too bad.”
That someone else very likely has zero interest in this proposed transaction; they just don’t want me to work for you. They will call me “illegal” because they can, and use that as an excuse to stop us from agreeing to help each other out.
Or that someone else might have some pie-in-the-sky, stupid-ass reason for wanting me to not be able to work. They might belong to some organization called Californians for Population Stabilization. This organization actually says that there are “too many people.” Yes. In a state with one of the lowest population densities in a largely unpopulated country. If this sounds disingenuous, that’s because it is.
Californians for Population Stabilization, like most organizations using the term “illegal labor,” is actually a front for the unions. Unions are deathly afraid of anyone possessing two hands and a brain because such persons represent labor competition. Unions would like all labor competition to be banned. This reflects a profound ignorance about the nature of an economy, that it’s a fixed-pie, zero-sum game. It ignores that those hands are attached to a mouth, and that brain contains aspirations. In other words, a working human being creates at least as much demand for labor as supply.
Thus, labeling certain people as “illegal,” intended to undermine their ability to support themselves, actually undermines their potential as sources of jobs for others. We’re used to unions engaging in self-destructive behavior by undermining the companies and industries they dominate. At least in those cases, some existing workers get a temporary benefit from bleeding their companies, even if it eventually undermines their jobs. But why should we put up with union attempts to keep other people from working for everyone’s benefit?
